Oil price slumps under 60 dollars

LONDON (AFP) - Oil prices plunged under 60 dollars per barrel in London this week,while other commodities rose as traders tracked recession worries, volatile equities and the demand outlook for raw materials. The price of oil has more than halved since scaling record heights above $147 in July. OIL: Oil prices dived to 17-month lows on global recession fears, hitting 59.02 dollars in London and 61.30 dollars in New York on Monday before clawing back some lost ground. "Oil markets seem to be pricing in a deep and long recession that will derail oil demand growth this year and next," wrote UBS economist Jan Stuart in a research note to clients. "Even though we still think that the credit crunch is exaggerating the real shift in oil demand trends, we have no way to know." UBS also slashed its forecasts for average Brent oil prices to 60 dollars in 2009 and 75 dollars in 2010 from previous estimates of 105 and 116 dollars respectively. Oil prices sank this week after data showed that the American economy " the biggest consumer of energy in the world " contracted at a 0.3 percent annualized pace in the third quarter as a global credit crunch saw consumers and businesses cut back on spending. "Crude oil fell after the release of the US (growth) figures," said Dresdner Kleinwort analyst Peter Fertig. "It is likely to head further down as declining US consumer spending could intensify the fear of falling oil demand. This would also be a drag on gold and other metals." Crude prices had risen Wednesday after interest rate cuts in the United States and China boosted expectations of higher demand in the world's two leading energy consumers, analysts said. Prices also found some support after the OPEC crude producers' cartel warned it could cut output further. OPEC Secretary General Abdalla Salem El-Badri said Tuesday it could slash output again if prices keep falling. OPEC produces 40pc of the world's crude oil. At an emergency meeting in Vienna last week, OPEC ministers agreed to reduce output by 1.5 million barrels a day to 27.3 million bpd. By Friday, New York's main oil futures contract, light sweet crude for delivery in December, had firmed to 64.50 dollars from $63.16 last week. Brent North Sea crude for December dipped to 62.07 dollars from 62.62 dollars last week. PRECIOUS METALS: The prices of precious metals advanced, led by gold. "The weaker dollar following the decision to cut the (US interest rates) ... helped support gold prices," said Barclays Capital analysts. A weak dollar stimulates demand for dollar-priced commodities because they become cheaper for investors holding stronger currencies. On the London Bullion Market, gold advanced to 730.75 dollars an ounce at Friday's late fixing from 712.50 dollars a week earlier. Silver rose to 9.28 dollars an ounce from 8.88 dollars. On the London Platinum and Palladium Market, platinum was up at 814 dollars an ounce at the late fixing on Friday from 778 dollars a week earlier. Palladium climbed to 198 dollars an ounce from 168 dollars. BASE METALS: Base metals mainly rose but recession concerns lingered. "It looks increasingly certain that we can expect a period of weaker metals consumption, with China unlikely to come to the rescue in the short term," wrote Barclays Capital analysts in a research note. "This does not automatically mean that prices will lurch lower, however. "The speed and scale of the fall in prices over the past month suggests that the market is already in the process of pricing in expectations of much weaker consumption." By Friday, copper for delivery in three months had risen to 3,890 dollars per tonne on the London Metal Exchange from 3,770 dollars a week earlier. Three-month aluminium was up at 2,008 dollars per tonne from 1,959.75 dollars. Three-month lead jumped to 1,431 dollars per tonne from 1,225 dollars. Three-month zinc fell to 1,130 dollars per tonne from 1,169.80 dollars. Three-month tin soared to 14,650 dollars per tonne from 11,300 dollars. Three-month nickel rallied to 11,249 dollars per tonne from 9,600 dollars. COCOA: Cocoa rebounded from sharp falls the previous week but a worldwide recession could send prices tumbling, analysts warned. "Cocoa futures prices could fall to 1,500 dollars per tonne in 2009 as global recession might cut demand, creating an oversupply situation," said the Public Ledger. By Friday on LIFFE, London's futures exchange, the price of cocoa for March was higher at 1,333 pounds per tonne from 1,283 pounds a week earlier. On the NYBOT, the December cocoa contract rallied to 2,063 dollars per tonne from 1,867 dollars. COFFEE: Coffee prices dipped in London but held firm in New York. By Friday on LIFFE, Robusta for January delivery fell to 1,591 dollars per tonne from 1,641 dollars a week earlier. On the New York Board of Trade (NYBOT), Arabica for December delivery rose to 110.90 US cents per pound from 107.80 cents. SUGAR: Sugar prices staged a rebound. By Friday on LIFFE, the price per tonne of white sugar for December delivery rose to 335.70 pounds from 295.50 pounds the previous week. On NYBOT, the price of unrefined sugar for March delivery increased to 11.82 US cents per pound from 10.57 cents. GRAINS AND SOYA: Grains and soya prices moved higher. "We are a market that is still dependant on outside markets," said US Commodities analyst Dan Roose. "If we get into a big meltdown in the energy (market) or the dollar moves up sharply, we think that would be a negative pull on the grain market." By Friday on the Chicago Board of Trade, maize for December delivery was up at 4.01 dollars per bushel from 3.72 dollars the previous week. January-dated soyabean meal " used in animal feed " rose to 9.35 dollars from 8.67 dollars. Wheat for December delivery strengthened to 5.31 dollars per bushel from 5.16 dollars. RUBBER: Malaysian rubber prices recovered as the world's top rubber producers " Thailand, Malaysia and Indonesia " planned production cuts to help prevent fresh price falls. On Friday, the Malaysian Rubber Board's benchmark SMR20 was higher at 175.25 US cents per kilo from 164.85 cents per kilo last week.